Scam involving Letters of Undertaking

Some key questions that come to my mind regarding the latest scam are:

a) What are the guidelines defined in our banking system before Letters of Undertaking (LoUs) are issued in favour of some clients? As these guarantee liability payments by one bank to another, isn't creditworthiness besides impeccable business credentials of their favored clients supposed be the topmost criteria?

b) As PNB's SWIFT system wasn't 'married' to their core banking system, was this not known either to the RBI or the powers that be at PNB since ages? Or did it come as news when this scam unfolded?

c) As Nirav Modi's firm managed to get LoUs issued without any margins for whatever reasons, how can he be accused for fraud, unless it is proved that he made fraudulent representations to avail of the same?

d) The ex-PNB staffer who is making news should be the one on the dock for using SWIFT system as his personal email id. The least that could have in put in place by RBI was to have two key authorities of the bank from different departments to authenticate such messages, so as to at least eliminate the possibility of one authority being compromised to the detriment of bank's interests.

e) As the beneficiary of LoUs would have been Modi's business partners, it is going to be an herculean task for our investigators to nail Modi guilty of any crime unless they conduct a forensic audit of the amounts released on the basis of such LoUs to identify its trail of movement,

f) And above all, it is indeed mysterious that how come not even the RBI considered it prudent to conduct forensic audits of such instruments like LoUs and SWIFT systems as a precautionary measure, to ensure that there was no compromise on the interests of the banks concerned?

Perhaps, this incident should serve as a wake-up call for our entire banking system, and lets hope and pray that is the last of such scams.

Crisis in Maldives

Two statements from China with regard to crisis in Maldives:

a) It is an internal matter and there should be no external intervention, and

b) We do not want another Doklam like situation with India.
Should put our concerns at rest with regard to the Chinese intentions in that island nation. Besides, China has also turned down a request from the Maldivian government to land its military boots in Maldives to secure its interests, stating that Maldives can secure itself.

But, parallels are being drawn with Operation Cactus, executed by India in 1988, to liberate Maldives from some mercenaries who were perhaps financed by some Maldivian national. This operation was carried out as per the request of then Maldivian President Gayoom, while in the current scenario is the Maldivian opposition which is requesting for military intervention by India.

Here, it is pertinent to recall the disaster which confronted the IPKF in Sri Lanka, which was originally tasked with ensuring peace between the Sri Lankan military and the LTTE cadres, but soon got engulfed in a situation which it was least prepared for.

Right now, even though we have erroneously refused to entertain the special Maldivian envoy, quoting reasons such as time constraint etc, we need to be in constant touch with the Maldivian Ambassador in New Delhi, and be clear on our expectations from their current President, as well as the options at our disposal should any off those options be required to be availed. Yes, our leadership has done the right thing by taking the US as well as Saudi Arabia on board vis a is Maldives, and as per the newspaper reports we are in touch with the Chinese as well on this issue.

But, it would have been reassuring if the Chinese leadership would have emphasized to the Maldivian President to restore democracy and will of the people, to prevent any civil war kind of scenario. That such as statement is yet to come from the Chinese is a matter of concern, notwithstanding that they themselves are yet to demonstrate their commitment to such principles.

Till then, its wait and watch, and hope that the will of people of Maldives reigns supreme, without having to land even a single foreign soldier and without having to fire even a single bullet